Specifically, the products will need to satisfy either of the three aspects: good taste, functional effects, and health benefits, CEO Yongsit Rojsrikul told NutraIngredients-Asia.
The Thai government recently relaxed the use of CBD in food, beverages, and supplements.
Raw materials including cannabis leaves and hemp seeds are approved for use, while cannabis flowers are still categorised as a narcotic substance and cannot be used in food and beverages.
Like many other manufacturers such as CP Foods and DOD Biotech, Tipco Foods is also jumping onto the bandwagon with plans to make foods and beverages containing hemp and CBD.
“We call it the miracle plant; it has a lot of health and even medicinal benefits and can be applied to many products to be consumed and even has industrial use.”
“We also call it an economic plant, meaning it can uplift the value of farm produce in Thailand, as part of the government’s promotional policies,” he said.
At the moment, the Thai FDA has not yet approved any finished food and beverage products containing CBD. Fresh cannabis leaves, however, are already approved for use in food retail business, such as restaurants and fruit juice stores.
“The law on CBD use has relaxed, classifying certain cannabis plant parts (leaves, roots, etc.) as non-narcotic (except the flowers and the seeds), thus consumable by the public, but before they approve any food products like this, they have to have a guideline in place [to decide which products could be approved], but the guidelines are not out yet.”
“We have sent in applications and are waiting for their approval. The guidelines was originally expected to be out in July, but because of the COVID-19 situation, the ministry of health is also busy with the pandemic so there's less focus on cannabis now, so things might get delayed,” he said.
Nonetheless, he believes that such products will flood the market when the time is ripe.
“It is a crowded market, but it is still a blue ocean industry, with all the competitors starting at the same point.
“I think we can still capture quite a good market share and given our Tipco's name in the market, I think we should be one of the winners.”
The company has launched its first CBD product in the food service sector, where fresh cannabis leaves are added into smoothies sold by its “Squeeze by Tipco” kiosks stationed in shopping malls and office buildings.
“We already launched since a month back, but because of COVID-19 and the Songkran holiday, it has been quiet because there was little traffic.”
Finished products plans
The company has also identified three areas which its CBD finished products should satisfy, namely good taste, functional effects, and health benefits.
In terms of taste, the company has developed CBD-based marinate sauce and dipping sauce.
In terms of functional effects, the company has developed mocktails with CBD extract added for relaxation effects.
As for health benefits, the company is exploring Thai traditional medicine containing CBD extracted from cannabis leaves.
The Department of Thai Traditional and Alternative Medicine has recently approved 16 traditional formulas that contain CBD. Five of the formulas include CBD from the cannabis leaves, the other 11 use CBD from the cannabis flowers.
The products are pending approval from the Thai FDA and the company hope to launch some in Q4 this year.
Streamlining the business
The company believes that it has the capability to take charge of the entire supply chain, from the upstream process of farming cannabis, to the midstream process of CBD extraction, all the way to the downstream stage, where finished consumer FMCG products are made.
“Right now, we focus on the downstream segment, because we are more ready as a food and beverage company,” Rojsrikul said.
Nonetheless, the company has also prepared itself for both the upstream and midstream businesses.
It has collaborated with Maejo University in developing a cannabis strain, TIPCO01, which has a higher CBD content. This in turn requires lesser raw material to be used to extract CBD.
“As you know, we have the extract know-how, the technology, and the infrastructure, so eventually, we could choose to do CBD extracts.
“We are also into the farming business. We have about 800 hectares of land, which is quite a lot, and so we can do the cannabis plantation as well.”
The company has already applied for license from the government to grow cannabis on its own plantation. The application is still pending result.
As such, at the moment, the company sources cannabis leaves from licensed producers such as universities and producers involved in the pilot plantation program approved by the government.
“As you can see, our company can do up, upstream, midstream, downstream and on top of that, we have distribution networks and retailing, we can distribute the products to shops and consumers.”
One of the challenges is lies in navigating regulatory contradiction.
For example, the regulation allows the use of hemp seed oil for food and drink products, but companies are not allowed access to the source of the seeds, which is the cannabis flowers.
“The laws are not in sync; how can we have the seed oil if we don't have the flower?
“It takes time to figure it out and I think everything will be settled by this year. But the problem is, along the way, there are a lot of uncertainties and fluctuations and speculations.”
For example, he pointed out that the fresh cannabis leaves cost only THB$500 (US$16) per kilo but shot up to THB$25k (US$802) per kilo after the authorities have approved the use of fresh leaves in food retail businesses.
“It is a bit difficult to manage business in this situation, and there are a lot of price speculations and fluctuations of raw materials.”
“But anyway, we will eventually do our own upstream, midstream, and downstream businesses and then, we can control our whole business value chain.”